Citibank: Wharf Land (01997)'s potential sale of Singaporean assets is expected to be a catalyst to maintain a “buy” rating

The Zhitong Finance App learned that Citibank released a research report saying that Jiulongchang Real Estate (01997) is evaluating the sale of its Singapore Orchard Road (Orchard Road) tourist area property portfolio, including Wheelock Place and Scotts Square Shopping Mall. The potential sale price may be higher than its book value. The bank predicts that the dividend per share will increase steadily by 1% to 2% from 2026 to 2027, with a dividend ratio of close to 6%, maintaining the “buy” rating and target price of HK$31.6 unchanged.

The bank believes that if the price is close to book value, it is a positive factor for the company's capital cycle and reducing the country's risk exposure, and it is expected that the stock price will respond positively in the short term. As of the end of December 2025, the book value of the relevant assets was approximately HK$7.7 billion, accounting for 3.4% of the company's total investment portfolio. Among them, the retail portion was valued at about HK$5 billion and the office portion was about HK$2.7 billion, while Singapore assets contributed about 2.9% to the revenue of Jiulong Cang Real Estate in 2025.

Citi estimates that if the proceeds of the sale are used to repay debts, the total debt will be reduced from about HK$34 billion in December 2025 to about HK$26 billion, and the net debt ratio for exam preparation will drop from 17.2% to 13.6%, saving about HK$316 million in financing costs each year, which is equivalent to about 5% of upward profit margin. Furthermore, the capital cycle can also provide the flexibility to maintain stable shareholder returns when the potential redevelopment or renovation of Marco Polo Hotels causes short-term profit fluctuations, while allowing the company to focus on Hong Kong assets, but it is still too early to discuss any special dividends or share repurchases.